Fitch downgrades 9 qatari banks

MUMBAI: With incremental bank lending making up the bulk of the government's nearly Rs 21 lakh crore stimulus package, lenders face significant asset quality challenges which can increase their dud loan ratios by up to 6 percentage points over the next two years, warns a report. The impact of forced lending on banks' impaired-loan ratios can be anywhere between 200 and 600 basis points (bps), depending on the severity of stress and banks' individual risk exposures and the higher regulatory provisions, Fitch Ratings said in the report on Thursday. The agency, however, did not offer a break-up of the NPAs between the state-run and private sector banks. The stimulus measures include extension of the 90-day moratorium on recognition of impaired loans to 180 days, in addition to several relaxations in bank lending limits, including allowing banks to fund interest on working capital loans. "These measures will put a heavy onus particularly on state-run banks which already have very weak … [Read more...] about Forced lending to cripple banks; NPAs to soar by up to 600 bps in 2 yrs: Fitch

As a result of Covid crisis, the asset quality ratios of the banks may be severely affected and the ratio could rise by 200-600 basis points (bps) depending upon the exposure to the risk and stress that individual banks face as per a Fitch report.This is mainly due to the difference in actual and real results of bank operations and lower loan growth. The report says that impact could be extended not only in the FY 21 but also in FY 22 as the impact of fresh differences in the results will only be reflected meaningfully after regulatory forbearance ends in August 2020.The slowdown will put pressure on asset quality across sectors and segments. Private banks have either better asset quality and/or loan-loss cover than state-run banks. But it will stand exposed due to their large retail books, especially in unsecured loans and credit cards which run a high risk of drastic reduction. The report mentioned that while secured loans such as home and auto are more probable to bounce, they will … [Read more...] about Signs of impending pressure on asset quality of Indian Banks: Fitch

Who needs a loss-making, inflexible oil refinery in a world where demand for petroleum has been obliterated? We’re about to find out.When consumption of transport fuels collapsed this year because of coronavirus, much of the industry moved into survival mode, cutting processing rates and even temporarily stopping refining in some cases. While that helped prop up the industry’s margins for a while, a combination of rising crude costs and still-weak end-user demand are starting to bite.With many oil traders and analysts expecting a slow and uncertain recovery in demand, there’s now an open question about where that leaves refineries supplying tens of billions of barrels of fuel each year. It seems likely that many of the weaker plants will be permanently shuttered.“The Covid situation has accelerated the rationalization process that was always coming,” said Spencer Welch, vice president of oil markets and downstream consulting at IHS Markit. “It will … [Read more...] about View: Covid-19 will hasten the demise of many oil refineries

By Sanju Verma Even as the Coronavirus pandemic is slated to bring the global economy to a grinding halt, Prime Minister Narendra Modi, recently unleashed a Rs 20.97 lakh crore, mega stimulus package, akin to roughly 10.48% of India’s GDP. Clearly, in the last one year, Modi has dismissed any form of incrementalism and embraced structural reforms, holistically, by dint of his courage of conviction. Reduction in corporate tax rate from 30% to 22% and for new companies to 15%, allowing private sector in commercial coal mining on a revenue sharing basis with no end use restrictions, 100% FDI via the automatic route in defence manufacturing, single brand retail and real estate broking services and privatisation of power distribution companies (DISCOMs) in union territories (UTs), underpin the essence of Modinomics. Some of them are the decision to implement Rs 102 lakh crore worth of infrastructure projects via the national infrastructure pipeline (NIP), lowering employees’ … [Read more...] about India will grow sharply with Modinomics 2.0